After tough battle, Nestle wins control of Perrier

March 25, 1992|By Roger Cohen | Roger Cohen,New York Times News Service

PARIS -- After Europe's toughest international corporate battle in several years, the Swiss food giant Nestle won control yesterday of Perrier, gaining an important stake in the world's expanding and highly profitable mineral-water business.

The Agnelli family of Italy, which battled Nestle for three months, gave up the fight as part of an accord under which the Swiss corporation, allied with the Indosuez bank, sweetened its offer for Source Perrier SA to $2.7 billion.

The Agnelli group, which holds 39.9 percent of Perrier's principal holding company, Exor S.A., agreed to tender Exor's 35.5 percent stake in the mineral water company to Nestle.

The parties also agreed to open the way for the Agnellis to take majority control of Exor, whose other assets include extensive real estate in central Paris and the renowned Chateau Margaux wine business.

"There are no losers," said Reto F. Domeniconi, Nestle's general manager.

Analysts agreed that the accord was balanced in that it provided Nestle with a powerful position in a fast-growing sector and the Agnellis with a substantial profit, estimated at more than $200 million, and assets likely to rise in value.

The Agnellis, who had shunned such high-profile takeover battles, seemed relieved.

"This could all have been settled in an afternoon a very long time ago," said Giovanni Agnelli, the chairman of the family's main business, the auto maker Fiat S.p.A. "But I had partners, and I believe in listening to one's partners in business."

The chief partner was Perrier's chairman, Jacques Vincent, who long opposed any settlement until court verdicts slashed the holdings of the Agnelli camp and opened the way for Nestle.

The deal will make Nestle the world's largest mineral water company. John Graham, a food-industry analyst at UBS Phillips & Drew, estimated that water will account for about 5 percent of the company's revenue, compared with about 1 percent of Nestle's $33.67 billion in sales last year.

"That is an attractive development for Nestle because the water business is growing at 8 to 10 percent a year worldwide," he said.

"People would have to look long and hard to find a market that is growing like the mineral water market," said N. Dominic Cadbury, chief executive of Cadbury.

Even the world's largest cola makers are taking note of water's popularity, which beverage experts attribute to an interest in healthy drinks and concern over the quality of drinking water.

Pepsico Inc. recently announced an agreement to distribute and market the Canadian spring water Avalon in the United States. Also, since 1989, the company has been test-marketing a line of sparkling water in Denver called H2Oh!